Leighton confirmed last week that it had suspended operations at two mines in South Kalimantan, majority-owned by Bumi, because of non-payment of “net project receivables or underclaims, to which Leighton has a contractual entitlement.”
The Financial Times reports that Bumi hit back, claiming it had paid Leighton’s Indonesian subsidiary, PT Thiess Contractors Indonesia, in full and that the mining suspension was “wrong, breaks established precedent norms and harms the local economy”
PT Arutmin Indonesia, which owns the two mines at the heart of the dispute, is 70% owned by Bumi Resources and 30% owned by India’s Tata Steel.
Bumi Resources said in a statement to the Financial Times that Arutmin was “very disappointed that Thiess has decided to pursue this course of action considering that the parties have worked together for 12 years, and until now, the parties have been able to satisfactorily resolve all previous disputes without resorting to such drastic measures”
Bumi said it launched legal action against Leighton in the Queensland Supreme Court in April.
Leighton has not commented on the legal action but said in the statement last week that the dispute was not expected to have any material impact on the group’s results, with resolutions on a number of claims expected during the remainder of the year.
The company said work at the Senakin and Satui mines should return to production following a satisfactory resolution of matters between the parties.
Meanwhile, mining work continues uninterrupted at the Kaltim Prima coal project (65% Bumi, 30% Tata and 5% other parties) where Thiess is undertaking contract mining work.
Leighton’s contract mining coal business in Indonesia contributed about 5.5% of total group revenue in 2012, with the Senakin and Satui mines contributing only about 1.5% of that. The dispute should not significantly impact troubled Bumi unless the suspension continues for months.
The coal miner already is struggling due to low coal prices, large debts and corporate governance disputes.
Bumi PLC is currently trying to split from the co-founding Bakrie family after a probe into financial irregularities and feuding between the family and co-founder Nat Rothschild exposed steep losses.
Bumi wants to split from the Bakries and unit PT Bumi, leaving Bumi focusing solely focused on 85%-owned Berau.
Bumi’s shares have been suspended due to a two-month delay in the publishing of its earnings and will not be resumed until an overhaul of "external systems and controls" is completed, expected by the end of June.
The group's operating loss for 2012 was $US757 million, with underlying losses of $52 million and underlying earnings before interest, tax, depreciation and amortisation of $365 million.
Annual revenue for the group was $1.5 billion, with free-on-board selling prices averaging $70.90 per tonne during the year.
